Suppose Portugal Has 700 Workers and 26,000 Units of Capital

question 80

Multiple Choice

Suppose Portugal has 700 workers and 26,000 units of capital, and France has 18,000 workers and 700 units of capital. Technology is identical in both countries. Assume that wine is the capital-intensive good and cloth is the labor-intensive good. Which one of the following statements is correct?

• A) Portugal will export wine and import cloth.
• B) France will export wine and import cloth.
• C) There is no basis for trade between France and Portugal.
• D) Portugal will export cloth and import wine.

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Definitions:

Ethnocentrism

The tendency to judge other groups according to the standards, behaviors, and customs of one’s own group.

Decoding

Extracting the idea from a message.

Receivers

The audience or entity that receives and interprets a message or information from a sender.

Sender's Culture

The cultural background and context of the person or organization sending a message, which can influence communication.